State of the State: Rural communities turn to innovative strategy to promote economic survival

Feb 1, 2003

Aaron Chambers
Credit WUIS/Illinois Issues

Birds of a feather flock together. This adage rings true for businesses in city centers. But it’s not necessarily the case in rural areas, where companies with similar interests don’t congregate naturally.

Unlike in Chicago, where some industries are magnets for suppliers or distributors, entrepreneurs tend to consider other factors when deciding to locate in less populated areas, including proximity to a waterway or highway, or access to a labor base. This certainly is true in the vast reaches of southern Illinois. 

Yet businesses and related interests could find one another with a little help. At least that’s the hope for an increasing number of developers. And in their efforts to jump-start the long-depressed economy of southern Illinois, that region’s developers are beginning to employ a cutting-edge strategy to help businesses make those connections. They’re turning to so-called cluster development — finding businesses with similar interests, then nurturing those relationships.

“We’re trying to figure out whether there are a set of industries that we might be able to form some sort of cluster around,” says Norman Walzer, director of the Illinois Institute for Rural Affairs at Western Illinois University in Macomb and the study’s lead investigator. “Conceptually, you try to get industries linked together so that you create a nexus of activity that will then attract other businesses to the area.”

Walzer is studying a 16-county area, from Randolph County east to White County and south to Pulaski County. He hopes his research will identify industries that could prosper in that economically depressed region. Factors under consideration include census data and transportation infrastructure. He’s also looking at schools and assessing whether job training programs at Southern Illinois University in Carbondale or one of the four community colleges in the region could complement the effort.

Walzer plans to complete the study by August. He launched it last December in conjunction with the Carbondale-based Greater Egypt Regional Planning and Development Commission, the Harrisburg-based Southeastern Illinois Regional Planning and Development Commission and the Ullin-based Southern Five Regional Planning District and Development Commission. It’s funded by a $99,765 grant from the Economic Development Administration at the U.S. Department of Commerce. 

“I don’t think this will happen in southern Illinois, but it’s conceivable that you go into an area and just find that there is no potential and that there are no clusters,” Walzer says. “If that’s the case, then it’s sort of everybody for himself.”

Meanwhile, a similar analysis of the Chicago metropolitan region’s projected economy through 2030 is due out late this month. Chicago Metropolis 2020, a coalition of business and civic leaders, is scheduled to release a comprehensive development and transportation plan for that six-county region. 

Business development has long been a prominent concern at the other end of the state. This year, it promises to gain even more attention as Gov. Rod Blagojevich settles into his new job. He pledged during his campaign to make economic revival in smaller communities, such as those in southern Illinois, a priority.

Blagojevich formed a committee in mid-January to advise him on economic growth.

In a speech delivered in December to an economic development conference at Illinois State University in Normal, David Wilhelm, chairman of the new governor’s transition team, said Blagojevich would “consider a fundamental measure of his success to be how well he has grown the economy and created jobs.”

In their efforts to jump-start the long-depressed economy of southern Illinois, that region's developers are beginning to employ a cutting-edge strategy to help businesses make connections.

Blagojevich pledged last year to create a $200 million state-secured venture capital fund for investment in economically depressed communities. The dollars, recruited from private investors, would be funneled to upstarts. Investors would be guaranteed state tax credits if the fund loses money. 

“We need to say to investors, ‘Look where you haven’t looked before. We’ll protect you against outside risk. Come on board,’” Wilhelm said.

Wilhelm, senior vice president of the Chicago-based business development firm Wilhelm & Conlon and former chairman of the Democratic National Committee, said the administration would earmark at least $25 million of the $200 million to fuel the expansion of value-added agricultural cooperatives in Illinois. 

Blagojevich also pledged to create 20 centers where entrepreneurs could get assistance with business planning and marketing. The state’s centers would work with existing programs, including those based at community colleges.

Now for the bad news: Wilhelm said Illinois is a long way from economic health compared to other states. And he gave a cloudy forecast for the state’s economic future, saying Illinois ranks among the bottom 10 states in basic educational skills, creation of new companies, employment growth, loans to small businesses and capacity of digital infrastructure.

“Our vision must not be limited to existing businesses alone,” he said. “We need to think a generation ahead, 50 years ahead, a century ahead, and it is when one looks to the future, the economy of 2050, that concerns start to mount about Illinois’ ability to compete. 

“At present, in my view, Illinois simply does not have the building blocks in place to prosper in the economy of the future, and so our economic engine needs a tuneup, maybe an overhaul of sorts. It needs some new components,” he said.

“We cannot put an engine designed for a 1972 Camaro in a 2003 Cadillac CTS. And we sure as heck can’t put a 1972 Camaro engine in a Cadillac in the year 2020.”

And that brings us to the economic development effort in southern Illinois. That region lost a major economic engine, the coal industry, after Congress tightened clean air requirements in the early 1980s. Only a dozen mines remain; thousands of jobs were lost. But there is evidence that area of the state is regaining economic momentum. 

The region has been successful, for instance, in attracting tourists who want to hunt or fish or simply visit such destinations as the Shawnee National Forest and Rend Lake Resort in Wayne Fitzgerrel State Recreation Area.

Coal also could make a comeback. Developers are eyeing up to three new mines in the region, according to Mike Murphy, former coal development chief at the state Department of Commerce and Community Affairs.

And, in a sign that southern Illinois is growing technologically, four years ago three hospitals were authorized to perform open-heart surgery — a first for that region.

“This certainly puts them on the technological front to provide these kinds of services without its residents having to travel long distances, and obviously these types of services make it more desirable for companies looking to relocate or expand in the area,” says Clark Gyure, a lobbyist for Southern Illinois Health Care, which owns one of the three hospitals. “The key here is that we are promoting the quality of life in this region and telling people that may relocate here to do so because of quality of life.”

Over the past decade, cluster development has become a popular model for analyzing regional economies and organizing forward-thinking strategies to promote regional development. Clusters developed naturally in high-technology hotbeds such as the Silicon Valley in California. The concept has been transplanted into other areas. And though the cluster strategy has traditionally been used in urban planning, economic developers have successfully employed it in rural areas as well.

Researchers in Minnesota, for instance, have identified clusters in several rural regions with industries as diverse as high technology and food processing. Lee Munnich Jr., Greg Schrock and Karen Cook of the Hubert H. Humphrey Institute of Public Affairs at the University of Minnesota in West Bank, studied what they called rural knowledge clusters in a report published last August. Such clusters rely heavily on a base of localized knowledge about the processes, markets or technologies relating to the products they make.

“Changes in the global economy have forced both urban and rural places to focus increasingly on innovation and competitiveness, and to look for creative niches and specializations,” they concluded. 

“This development has posed a dilemma for rural development practitioners and policy-makers looking to update their economic base to the changing contours of a knowledge-based economy. What role does a region’s historical knowledge base play in creating opportunities for the future? What conditions are necessary for this adaptation and evolution to take place? How do localized institutions catalyze this process?” 

 

Aaron Chambers can be reached at statehousebureau@aol.com

 

Illinois Issues, February, 2003